BT shares its top recommendations for financial advisers, helping their clients plan for the upcoming financial year.
With the end of the 2024 financial year fast approaching, this period can present important opportunities for advisers to check in with their clients and strengthen relationships ahead of them filing their annual tax returns.
According to Bryan Ashenden, BT’s head of financial literacy and advocacy, Australians in the mass affluent segments are focused on “back to basics” budgeting as stubborn inflation and cost-of-living pressures remain challenging.
“While financial advisers tend to contact us about technical topics, their questions on super, tax and social security are often in the context of finding savings and increasing income for their mass affluent clients in the current environment,” Ashenden explained.
With the BT technical services team receiving more than 8,000 adviser queries each year, the firm collated its EOFY suggestions based on the most popular advice themes in the June quarter.
Boosting income
“It’s important to consider your income needs and plan to enjoy an active life, for longer. Right now, there are also short-term considerations as well, as retirees might be finding that their well-planned budgets need to be revised,” the BT head commented.
Reviewing investment strategies and savings accounts for higher returns is crucial, Ashenden said, particularly as older Australians see higher living costs impact their retirement funds.
“Clients may be missing out on better returns that equities and other asset classes can produce over longer investment periods. The new financial year is a good time to review investment strategies. Investors might want to weigh up whether riskier but higher return investments are appropriate for those who are investing for the medium to long term.”
Government’s $3 million superannuation cap
From 1 July 2025, clients will pay an extra 15 per cent in tax on earnings corresponding to the amount of their super balance exceeding $3 million.
With this topic being top of mind for advisers and having just one more year to plan ahead, Ashenden encouraged advisers to prepare early for this change.
“For high-net-worth clients, the proposed Division 296 tax – on superannuation balances of over $3 million – remains a key focus.
“While the tax is not yet law, many advisers have been on the front foot and have already discussed this proposed change with clients. For those who haven’t, there is still ample time to do so. There is no one-size-fits-all formula for calculating the additional tax payable, as there are certain circumstances that need to be taken into account,” he described.
Social security payments
Assessing whether retiree clients are entitled to any government support can also help reduce cost-of-living pressures. For example, Commonwealth Rent Assistance is set to rise by 10 per cent from 20 September 2024.
Ashenden added: “This social security measure benefits more people than what some clients might expect; for example, those who are living in retirement villages may qualify for rent assistance.”
Incoming tax cuts
With individuals in lower income tax brackets set to receive potential tax cuts, the BT head recognised the value of contributing these extra funds into a client’s super account.
“Anyone making voluntary contributions should be aware of their available cap space and whether they have any carry forward cap space available.”
